Employee Benefit Reporting - A Checklist For Your Team's W-2s

It’s that time of year again, when year-end reporting is front and center for HR professionals. One reporting requirement that can easily be overlooked is tabulating what you’ve provided to your team in employee benefits.

If you offer certain types of employee benefits and reimbursements (like those on the list below) those totals must be included on your employees’ W-2s as part of their taxable income for the year.

Keep in mind this list contains some of the most common benefits reported; it’s not meant to be comprehensive. Be sure to talk to your tax advisor to make sure you are in complete compliance.

What to Include on Employee W-2s

Qualified Transportation Benefits -- If you have a qualified plan in place, transportation reimbursements for the following are not taxable up the specified amounts:

• transit pass and/or commuter highway vehicle (e.g. vanpool) up to $130 per month
• qualified parking up to $250 per month; or
• qualified bicycle commuting reimbursement up to $20 per month.

Anything over those amounts must be reported as taxable income.

Group-Term Life Insurance – If you paid for group-term life insurance over $50,000 for an employee, you must report the taxable cost of excess coverage on your employee’s W-2.

S-Corp Owner Accident & Health Insurance Premiums -- The cost of accident and health insurance premiums for 2% or more shareholder-employees paid by an S-Corporation must be included as taxable wages. In some cases, the employer contributions to the HSA of a more-than-2 percent shareholder are also treated as wages.

Employee Stock Options – If an employee exercises stock options during the year, the amount of taxable wages reported on their W-2 is calculated using this formula:

Taxable Wages =
Fair market value of the stock on the day the option was exercised
MINUS
the fair market value on the date the right was  granted

The taxable amount is subject to federal income taxes, Social Security, Medicare, and FUTA...

Educational Assistance – Up to $5,250 of educational assistance provided to an employee under a qualified program are exempt from taxable wages. If you do not have an educational assistance plan, or if you provide an employee assistance exceeding this amount, you must include the value of these benefits as wages, unless the benefits cover education that is a condition of employment.

Moving Expenses -- Moving expenses are generally not taxable to your employee. However, the amount reimbursed directly to the employee must be reported in box 12 of Form W-2.

Athletic Facilities -- If you paid for a fitness program for your employee at an off-site resort, hotel or athletic club, the value of the program must be included in the employee’s compensation.  

Employer Provided Cell Phones -- Cell phone benefits are generally not reported from your employees’ taxable wages if the phones were for noncompensatory business purposes.

Affordable Care Act Requirements – New This Year

While we’re talking about year-end reporting, don’t forget that Affordable Care Act (ACA) Forms 1095-C are due to your employees by January 31. This applies to your company if you are an applicable large employer (ALE) with 50 or more full-time employees.

This is new for a lot of folks, so be sure to read this article on ACA reporting and compliance to learn the new requirements and help your employees know what to expect.
For questions about any of these year-end requirements, please contact your Stratus HR representative.